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Tesla Makes More Money Trading Bitcoin Than Selling Cars
- yawnxyz 6y agoI'm curious — for startups that are funded, what do you do with your cash? Say, if you got $100k in pre-seed. Do you create a bank for your startup (e.g. First Republic) and put it in a cash account? Do you put it in something like a managed or robotrader account? ...do you put it in bitcoin or crypto?
- coding123 6y agoThere is also evidence of Musk tweeting in favor of doge and then bashing it. Clear evidence of manipulation.
- Havoc 6y ago...but not illegal as best as I can tell
- beckingz 6y agoPeople are allowed to change their mind on if they like the coin, right?
- CabSauce 6y agoI'm not trying to defend anything... But why is changing a stance on something 'clear evidence of manipulation'? Is there evidence he traded doge before/after those tweets and the SNL appearance?
- guerrilla 6y agoI think it's because no other properties of it have changed in the meantime, so one might think it's either arbitrary and irrational or manipulation and rational.
- edoceo 6y agoOther properties have changed tho[0]. All these markets are like a river, constantly changing. Elon is only one stone. [0] some businesses have started accepting Doge, many new FOMO participants among other things
- elliekelly 6y agoBecause he’s making his stance public with the knowledge and expectation that his followers will act on it and, in acting on it, will change the price.
- kerng 6y agoBecause Tesla or him are in fact not selling their Bitcoin assets. He might as well be buying bitcoin or another crypto asset now.
- throwkeep 6y agoOr clear evidence that he is moderating the rhetoric, after seeing people literally YOLO their life savings into a joke coin.
- pessimizer 6y agoI suppose you can call it moderation; it lost 1/3 of its worth (along with 1/3 of the life savings of those people.)
- elif 6y agoIn comedy, it is common to take multiple perspectives for the sake of a joke.
- tolbish 6y agoSo simultaneously a joke and market manipulation?
- vuldin 6y agoThey also make much of their profits from selling emission credits to other car manufacturers: https://www.cnbc.com/2020/07/23/teslas-sale-of-environmental-credits-help-drive-to-profitability.html https://www.cnbc.com/2020/07/23/teslas-sale-of-environmental...
- jfk13 6y ago"Much" may even be an understatement here; according to the WSJ article, > sales of regulatory credits to other auto makers to help them meet emissions mandates, which carry a 100% profit margin, reached $518 million. That accounts for nearly 100% of Tesla’s $533 million in pretax income it sounds like "almost all" would be a reasonable description.
- bryanlarsen 6y agoTesla had a 24% gross margin in Q1. They made a massive amount of money selling cars. They also had a massive amount of R&D and capital expenditures. The emissions credits required R&D and capital expenditures in prior years so you can't say that the R&D and capital expenditures should only be charged against vehicle sales and not emissions credits.
- carlivar 6y agoAgreed, but you CAN say that the business of selling cars is a long term endeavor and the regulatory credits are transient. Invest accordingly.
- bryanlarsen 6y agoTesla's Q1 also included a massive number of transient expenses (like Musk's stock options) that were significantly larger than transient income like emission credits.
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- fullshark 6y agoIt's not risky, when your CEO can tweet a few words and make its value move +/- 10% in a day.
- akshayB 6y agoCrypto is wild wild west even a small speculation can send prices up like 10-20% in a day. There is little to no government oversight, if you have a hint or some insider knowledge there is lot of money to be made. Other thing you can do is whenever crypto is down just put few dollars across all options you have and eventually one of these coins will skyrocket and you diversify again.
- akshayB 6y agoFunny thing lot of S&P 500 companies if they do like 5-10% more revenue Wall Street hold a parade for that stock, while in crypto it can happen in matter of hour.
- nappy-doo 6y agoI think that's because Wall Street believes it when a company does that much more revenue.
- HeadsUpHigh 6y agoGood thing crypto has done it's cycles before without Musk. The market doesn't need anyone to grow.
- grecy 6y agoYesterday Tesla released a statement that they will no longer accept Bitcoin, because of the fossil fuel costs associated with the network. https://twitter.com/elonmusk/status/1392602041025843203 https://twitter.com/elonmusk/status/1392602041025843203
- greggturkington 6y agoShame they didn't research that before they bought $1.5 billion in BTC. Presumably they're donating all their profits from their BTC purchase to carbon offsets? Otherwise it's all worthless posturing.
- ravi-delia 6y agoIt seems unlikely that the carbon cost of the transaction even slightly approaches the amount of profit they've made.
- elliekelly 6y agoIt also seems unlikely the environment had anything at all to do with their bitcoin flip flop. The environmental concerns existed and were very well discussed and publicized before Tesla decided to accept bitcoin. It was the “good” reason for their decision but not the real reason.
- jkepler 6y agoBut doesn't his tweet also implicitly say they're HODLing for the long term? He said they won't sell any BTC until there's less energy consumption... does that mean they wait until the miners are 100% on renewable energy (instead of the ~75% renewable today)?
- question000 6y agoPeople say with the recent unemployment payments that's there's no incentive to "work" anymore. But in my personal life I'm seeing more and more people quit their jobs to do things like live off Bitcoin fluctuation trading, living off stock market returns, renting out their properties. etc. There seems to be almost no incentive to preform actual labor when just sitting back and watching Coinbase 24/7 is objectively more profitable.
- sschueller 6y agoWhen taxes favor making money with money than labor why would anyone want to work? Labor should be tax free or low and capital gain should be taxed high. Time is more valuable than money and taxes should reflect that.
- chacham15 6y ago> Time is more valuable than money and taxes should reflect that. I understand the sentiment, but it literally isnt true. If it were, then noone would accept a job since they'd rather have the time instead. At the very least, there is more nuance to be observed here.
- bigyikes 6y agoI would gladly take a pay cut if my job let me work less time.
- the_lonely_road 6y agoSeconded. If I could keep my career security (I will still be employed here 10 years from now unless black swan) and healthcare (no spouse) while cutting pay and hours in half I would take it in a HEARTBEAT. No one is offering that.
- misterremote 6y agoBut shouldn’t that be totally doable? What’s the argument against that by the employer? Because pay is also 50%
- josefresco 6y ago$101 million is more than any other source of revenue? "Bottom line" is what I assume when I read "makes more money".
- aerosmile 6y agoWhat a sensationalist title. Technically correct, yes, but misleading in spirit. Most people will see the title and not read the rest of the article, which results in the sentiment: "the only reason why Tesla is still afloat is because of XYZ." Would you want to invest in a company like that? And yet, as we all know, Tesla has been an amazing stock to buy over the last couple of years, and it was also so incredibly predictable [0][1]. If you haven't made money on Tesla, then it's because of titles like this. I would be furious with WJS and all other publications that have been talking shit about Tesla - they are doing you a disservice. [0] This statement tends to get people riled up, but I noticed a pattern: people who agree are those who have driven a Tesla, and people who don't are those who haven't. [1] The experience of driving a Tesla is unlike anything else in its price class. But that's subjective, so let me make another argument for why the stock should have been an obvious buy all these years: the brand value alone will continue to propel their sales for years to come. When someone says "I drive a BMW" and someone else says "I drive a Tesla," which one stands out more? People care about brands, as you can see in the rise of the Coca Cola stock in the last 30 years (btw, if you haven't checked out that graph, you really should). So if Coca Cola was a good buy and we celebrate Warren Buffett for recognizing that, on the brand thesis alone, Tesla should have been as well. But I guess you won't read that in the WSJ.
- throwaway20875 6y ago>What a sensationalist title. Technically correct, yes, but misleading in spirit. Most people will see the title and not read the rest of the article, which results in the sentiment: "the only reason why Tesla is still afloat is because of XYZ." Would you want to invest in a company like that? I wouldn't invest in Tesla because it's valued at a price/market capitalization worth more than all other car companies combined. This is before we get into the crypto currency hijinks or Elon's market manipulating tweets. The valuation is insane and not supported by the current or future business.
- aerosmile 6y agoThe party may or may not be over. We'll see. WSJ's sentiment on the company has been so negative for such a long time, that at some point between now and 100 years from now, they might finally be proven right. Once they finally get it, they will be looking back at 100s of billions worth of wrong financial advice that they've signaled with their negative titles. The point I would drive home here is why trust a paper to give future guidance if their past guidance has been so spectacularly wrong? Again, the brand of the company alone was a strong signal that you never saw people write about.
- zaroth 6y agoThe headline is not only wrong but it is intentionally misleading. I don’t understand the games people play when certain financial numbers line up and they want to “give credit” for all the profit to one thing or another. It’s not reality, and it’s not how a company is run. Tesla is trying to grow as quickly as possible, and will deploy as much capital to that end that they can do so reasonably efficiently. They sold about $10 billion of product with a gross margin over 20%. That’s $2 billion of gross profit that can fund their growth. They also had ~$500 million of credits due to making all those cars, so it’s $2.5 billion in gross profit from selling cars that funds their future growth. Additionally they apparently reported another ~$100 million of capital gains from Bitcoin. That’s an additional 4%. The Bitcoin did not drive their profit. The credits did not drive their profit. What drives profit — when selling a product with 20-25% gross margin - is how much you are spending on future growth. And they are growing at 50% YoY which is nothing short of incredible at their scale.
- misiti3780 6y agoThe same people shitting on Tesla now were shitting on Amazon 10 years ago (and we know how that turned out). It's the exact same situation, only Elon Musk is more active/controversial on Twitter than Bezos ever was.
- adventured 6y agoIt's not the same situation at all. The car industry is a known quantity in terms of sales potential, margins, costs and possible overall scale. Tesla will never exceed today's version of Toyota or VW in terms of size. There's your cap. And that's all before the market is entirely flooded with EV competition. AWS is a better profit machine than anything Tesla will ever produce. Tesla will never own half the automobile market, nor will they ever have AWS operating income margins (Tesla's operating income margins are typically 5-10% in a good quarter, and that's normal for the auto industry; which is half to 1/4 that of AWS). That's the reason Tesla will never have an Amazon-like result. It wasn't retail that made Amazon worth so much. There's nothing special about electric cars, there's no magic that will expand the car market by ten fold just because they're EVs; there's no super margin jump that makes electric cars two or three times as profitable compared to selling a $45,000 BMW or Mercedes. AWS can generate $20 to $30 billion in operating income on $100b-$120b in sales. It's very likely to get there at this point. There is almost no scenario where Tesla makes that much money selling expensive electric vehicles (and solar panels are a horrific business for generating profit, as is the battery industry). Tesla needs tens of billions of dollars in annual profit to float its market cap (and that's just to support where it's already at). I was defending Tesla when a zillion people on HN were saying they could never mass produce the Model 3. I was right. I was defending Tesla when a zillion people on HN were claiming it was going to go bankrupt. I was right. Before that I was defending the Model S in its early days. I was right. And I'm right about this too, and it's very obvious Tesla's just going to end up as another automobile company (best case scenario). There's nothing special about being the next Mercedes, it isn't worth $500-$900 billion to be that.
- ericmay 6y agoExactly. That's why people invest. Not just a car company ;)
- jb775 6y agoMakes you wonder if it was all a pump and dump scheme to start accepting Bitcoin in the first place. Nothing changed between then and now in regards to energy use of Bitcoin. Completely legal tho, so maybe it's Elon's way of rubbing it in the SEC's face.
- antattack 6y agoAccording to chart[1] that Musk himself posted, Bitcoin electricity consumption skyrocketed since Tesla made the investment. [1]https://cbeci.org/ https://cbeci.org/
- rawtxapp 6y agoThose are estimated/annualized upper bounds.
- antattack 6y agoAnyway you look at it, Bitcoin is an energy hog: Bitcoin mining CO2 output is larger than American Airlines or 8.9 million cars: https://fortune.com/2021/05/13/musk-bitcoin-mining-bad-planet-heres-how-bad/?queryly=related_article https://fortune.com/2021/05/13/musk-bitcoin-mining-bad-plane...
- 3pt14159 6y agoI don't think so. Had Tesla sold more than 10% of their Bitcoin then sure, but as it stands right now they're still quite exposed to the currency and this new announcement by Musk, and his pivot to Dogecoin for SpaceX is much more likely to be a net-negative for their Bitcoin holdings. I did some Googling and I can't find whether or not Tesla holds any Dogecoin. I don't think so? All I can find is that Elon personally bought some Dogecoin for his child.
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- sunstone 6y agoIs this ex capex?
- sergiosgc 6y agoIt's an accounting perspective, not cash-flow. Capex shows up as asset depreciation, over the expected lifetime of the asset.
- motohagiography 6y agoTesla is only a car company the way Google is an email or search provider, imo. Their long bet on cryptocurrencies is smart given instead of shedding electrical load into the ground, Tesla can probably recoup the electricity to power micro mining. There is so much fashionable hating on Musk, and that he manages to survive it means those people don't see what he does.